Offering multi-tier commissions to affiliates

offering multiple affiliate commission levels

Can Modular Merchant do multiple tier affiliate marketing?
For example, if Affiliate A signs up Affiliate B, can the system be set up so that Affiliate B shares a portion of Affiliate A's commissions as a reward for signing him up?

— Multilevel Marketer in Montana

An excellent question. The short answer is: Yes.

The long answer, complete with examples and a flowery introduction is...

Modular Merchant allows you to turn your customers into a thriving, vibrant affiliate sales force with the click of a button. A customer can start earning commissions on the sales they bring in to your store simply be selecting the Is Affiliate option in the Customer Editor.

But, it's likely that anyone that's interested in marketing your website as an affiliate also knows a few others that would be interested too. In a multi-tiered marketing environment, your affiliates earn a commission not only on the sales that they generate, but also on the sales generated by anyone else that they get to sign up as an affiliate in your store.

Some shopping carts have a single-tier or two-tier marketing system. But Modular Merchant's affiliate marketing system is a multi-tiered system with no set limit to the number of levels that can be instituted. (Store administrators can set a limit to the number of tier levels in the Affiliate module settings if they wish.)

key concept: parent affiliate

If a user signs up to become a new affiliate for your store after clicking on a website link owned by one of your existing affiliates, then the existing affiliate is considered to be the "parent" of the new affiliate.

It's possible to set up your store's affiliate marketing program so that your new affiliates share a portion of the commissions they earn with the "parent" that led them to you, as a "thank you" or bonus for the original affiliate.

The affiliate module distributes commissions on a hierarchical basis, starting from the affiliate that generated the commission, up through each of their "parent" affiliates until reaching the end of the chain of affiliates.

For example, affiliate "A" joins the program and earns commissions for the sales they bring in to your store. If affiliates "B" and "C" to sign up after clicking on one of affiliate "A"'s affiliate links, all revenue generated by affiliates "B" and "C" will also result in additional commission (at a lower rate) for affiliate "A".

Let's look at a practical application of the system in another example:

example of shared affiliate commissions

In my store, I have an affiliate program. Affiliates earn $100 for every sale of my Uncle Lerow's Good Times Ecommerce Elixir that they generate. My store also uses the shopping cart software's affiliate program, and it is set to credit an affiliate's parent with 10% of the commissions earned by their child affiliates.

My store also has a customer named Juan, who is also an affiliate.

Meet Juan, the affiliate.

Juan has a website, on which he's added a link to my store that include his affiliate tracking ID code. When a customer comes to my store through this link on his website and purchases the Elixir product, Juan will earn a $100 affiliate commission.

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Elixir Sale

$100 Commission for Juan

An affiliate becomes the parent of another affiliate
Eventually, another customer, named Tula, becomes an affiliate for my store after clicking on Juan's affiliate link. Since Tula came to my store by clicking on one of Juan's links, Juan is now Tula's "parent" affiliate, and he earns a percentage of Tula's commissions

Now, with the store's "Parent Affiliate Percentage" set to 10%, Juan would earn $10.00 on the hundred dollar commission for an Elixir sale that is made by a customer that came to my store through the link on Juan's website. Tula's commission would be reduced from a hundred to $90.00.

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Elixir Sale

$90 Commission for Tula

$10 "Parent" Commission for Juan

An affiliate with a parent becomes the parent of another affiliate
But what if a third affiliate, Trey signs up after following a link on Tula's website? Tula is now the "parent" affiliate of Trey, and, since Juan is the "parent" affiliate of Tula, he is effectively is Trey's "grandparent" affiliate.

In this case, Tula would earn 10% of Trey's commissions, and Juan would still earn a 10% slice of Tula's. In other words, a hundred dollar commission generated by Trey would result in $90.00 for Trey, $9.00 for Tula and $1.00 for Juan.

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Elixir Sale

$90 Commission for Trey

$9 "Parent" Commission for Tula

$1 "Parent" Commission for Juan

And finally, if a fourth affiliate, Fergie, came along, signing up with Trey as her "parent" affiliate, then a hundred dollar commission would result in $90.00 for Fergie, $9.00 for Trey, $0.90 for Tula and $0.10 for Juan.

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Elixir Sale

$90 Commission for Fergie

$9 "Parent" Commission for Trey

90¢ "Parent" Commission for Tula

10¢ "Parent" Commission for Juan

Multiple tier levels allow one affiliate to receive a share of the commissions earned by a second affiliate that they signed up. And if that second affiliate signs up a third, then a portion of their commissions can be shared as well, continuing and on and on until their commission base covers all time and space.

By utilizing the "Parent Affiliate" options available in the shopping cart software's Affiliate Marketing system, it is possible to offer rewards to those affiliates that generate even more affiliates for your online store.